5% Salary Cut Reversed for Top State Workers : Budget: They will get vacation time or cash. Wilson’s office cites fairness, saying other employees lost no pay.

State government supervisors, top managers and political appointees who took a 5% pay cut last year will have their pay restored and will be eligible for a windfall in cash or vacation next spring despite a looming shortfall in the state budget.

Gov. Pete Wilson ordered the pay cut in 1991 to help deal with the budget crises that have confronted him since the day he took office. But Administration officials decided to restore the salaries after 18 months and repay the money employees lost.

Restoring the pay cuts will cost the state between $9 million and $17 million this fiscal year. The state would be liable for another $51 million over several years if all the affected employees take their repayment in cash rather than vacation time, Legislative Analyst Elizabeth Hill said in a report.

A Wilson Administration spokeswoman said officials decided to reverse the pay cut for supervisors and managers as a matter of fairness after Wilson was thwarted in his attempt to force an identical reduction on rank and file employees.

Wilson’s proposed pay cut for rank and file workers was rejected by state employee unions and the Legislature, and the courts ruled that the governor lacked the power to implement it unilaterally. After a year of bargaining, Wilson earlier this year agreed to new contracts that created a “personal leave” program for those workers.

The personal leave program docked unionized workers one day’s pay per month--equivalent to about 5% of their salary--with the promise that they would get the money back in cash or vacation credits after 18 months.

In the meantime, more than 25,000 supervisors and managers not covered by union contracts already had given up 5% of their pay for nearly a year with no expectation of having it returned.

The Administration decided to put those employees--who range from Highway Patrol sergeants to department directors--into the same personal leave program negotiated for rank and file workers and gave them retroactive credit for money they had already lost.

“We tried to bring a little equity to the situation,” said Sandra Salazar, a spokeswoman for the Department of Personnel Administration. “It was important to us to not let the supervisors and managers go on being the only group in state service to do this (take a pay cut).”

As authorization the department cited a bill that was amended and hastily passed in both houses of the Legislature on July 6. But neither the bill nor analyses given to legislators said the program would include retroactive pay for those employees who lost salary.

At the time of the vote, the official Assembly analysis and a news release from the Wilson Administration said the program would save the state $79 million in the 1992-93 fiscal year. But according to a recent report on the budget by the legislative analyst, the program would be a cost, not a saving, to taxpayers.

The same report issued last week predicted that Wilson and lawmakers will confront a $7.5-billion budget shortfall next spring.

Salazar acknowledged that restoring the salaries will end up costing the state money. But she said the cost will probably be less than the worst case posed by the legislative analyst because most workers will take the repayment in vacation time rather than cash. Only retiring workers have an absolute right to “cash out,” she said. Others have to wait until their departments have spare funds.

“We have been urging the employees to use those credits for vacation and not rely on the ability of the departments to cash them out,” Salazar said.

A spokesman for Wilson said no one on the governor’s executive staff of about 100 people will get the windfall or have their pay restored. Dan Schnur, Wilson’s communications director, said the governor made the decision Monday after inquiries for this article.

“The state is experiencing a very severe budget shortfall,” Schnur said. “The governor believes, as do those on his staff, that everybody has to pull together to help the state get through.”

Meanwhile, at a news conference Monday, Wilson refused to say what steps he intends to take to deal with the looming budget shortfall, which has been variously estimated at $4.1 billion to $7.5 billion.

Wilson told reporters it was “slightly premature” to discuss the issue. He said there was “much that is unknown” about the projected gap but he intends to “fashion a strategy” to deal with it.